Letter from Lloyd

Apr. 26, 2010 5:36 PM ET

We at Java Jag were unsure about what to write this week, but providence stepped in and we received, from a source labeled “spam” a pdf on the letter below. It appears to have been sent by Lloyd C. Blankfein, CEO of Goldman Sachs to the governor of New Jersey. Since the legitimacy of the Constantine Donation and the Zimmerman telegram are still in doubt centuries and decades later, we’re not going to dwell on its authenticity. You be the judge.

Governor Chris ChristieP.O. Box 001 Trenton, NY 08625

Dear Governor:

I send you belated congratulations on your recent election. Our past CEO and Chairman here at Goldman Sachs, Jon Corzine clearly did not do the job his constituents had hoped for, but I am optimistic you can stand up to those difficult and entrenched teachers, policemen and firefighters better than he did. The sense of entitlement and privilege these civil servants and unionists possess knows no bounds. I speak for everyone here at Goldman Sachs when I say leverage, risky finances and fantasy accounting are no way to run a state.

Anyway, the real purpose of this communication is to alert you to an opportunity that would be a major cash infusion and economic shot in the arm for New Jersey. Our distressed real estate/vulture fund desk came across a defaulted property in Atlantic City -- the 2000 room Revel Hotel/Casino -- a project that has been abandoned by our competitor Morgan Stanley. They have written off and walked away from nearly a billion dollar investment that still requires another billion and a half to complete.

As you may be aware, there have been some new developments here at GS. Some of our proprietary, structured synthetic credit derivative and swap products have unfortunately come under regulatory, political, and media fire. As I sought to build a stronger and more diverse Goldman, we ventured into areas further afield than our traditional investment and underwriting franchises. This may have confused some of the public and their political representatives. The charges against us simply boil down to: We are “taking bets” rather than making investments.

Frankly, I agree with those characterizations. Modern finance is very complex and we must be able to offer our clients, while simultaneously availing ourselves of, all avenues for profit from movement in any direction of a market. Short, long, red, black, aces high, covered calls, naked shorts, synthetic CDO’s…craps! What’s the difference? Why do you think they say ‘roll the dice’ when clients are contemplating one of our opaque investments?

Our executive council, board and I are meeting with our legal representatives to map out a response to the SEC charges. Of course, our PR department is working overtime to spin this favorably. However, and I tell you this is the strictest of confidence, one of the real opportunities we see is to admit to a lot of the charges and capitalize on them even more. The shareholder, who in 2007 protested that she thought, “UBS was a bank and not a ‘casino,’” was unaware of how prescient her remark was.

Which brings me to my letter to you. We are thinking of opening and operating a casino where market/options/credit bets could be made with liquidity and transparency. All parties and counterparties on each side of a trade would be able see the odds from the floor on a giant digital board…just like sports betting in Vegas. Who better to fix the odds and know the spreads than Goldman! In a sense we have been the ‘house’ of the financial world for a long time.

Rather than having a sales desk staffed with employees possessing strange names calling and emailing all over the world to sell this toxic stuff, we would open all the bets to the public and everyone could take the positions they felt comfortable with. You can see how this would eliminate all the charges of ‘stacked deck’ and ‘insider self-dealing’ we are now faced with.

I am sure you will agree this is very exciting. There are even some here who want to follow the Steve Winn model and simply call the casino “Lloyd’s” Others envision large gold (get it) GS letters atop the building.

We would love to have your support in this endeavor. Your backing would mean a lot to us as we try to buy the Revel for pennies on a dollar. We have formed a shell corporation to make the approach, so, if you hear about Abracadabra Corp bidding on the property, it could well be us.

Lastly, I am taking the liberty of asking our sovereign and muni-bond underwriting departments to contact you. I may remind you they helped Greece in the past with their debt/accounting. They have advised me that there are numerous ways we could get government tax advantages and/or credit backstopping for this project. We believe this plan will help revitalize Atlantic City by creating a lot of jobs. Isn’t that what Wall Street is about after all?